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| First of all, keep in mind that the aluminum industry is complicated. More than half the aluminum that we use is made from scrap but some aluminum made from scrap can't be used for certain high value high strength products like aircraft and probably Timpte trailers. So you don't know exactly how tariffs might affect the supply of a particular kind of aluminum product. What we do know is that the high quality aluminum produced from primary production from bauxite has declined in this country primarily due to high electric power prices. And who's fault is that if US primary production aluminum is not competitive due to high electric prices?
And it's not just aluminum from China that is subject to the 10% tariff, we were importing about 30% of the aluminum we use and tariffs apply to 60% of that. But without knowing what kind of aluminum they use, you can't say just how things might go. For example, that 10% tariff on high quality aluminum might cause a shortage of a particular type of product and as a consequence drive up that price even more than 10%.
There are other issues that need to be considered. Like, every year there is a lot of new aluminum made in the world, and unlike corn or soybeans , aluminum can be recycled, not all of it is lost to corrosion. As a consequence the supply of aluminum accumulates year after year. How much new aluminum does the world need every year. The same with steel. The local steel mill here runs almost entirely on scrap. We literally don't need the number of iron & steel smelters we once did. Maybe we only need one or two primary production aluminum smelters anymore. Trying to keep more plants in production even for strategic purposes might simply not be necessary. Besides, all our bauxite is imported anyhow. | |
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Tariff’s with China
